CBS appears to have come through its Q4 period relatively unscathed, despite a Thursday Night Football deal that left it with three fewer games than it had in 2015, and anemic ratings as some football fans turned to news channels to keep up with the unusual election.
Adjusted earnings came in at $1.11, a penny ahead of analyst expectations.
Revenues at $3.52 billion were down 2% as reported — but were scrambled a bit by its agreement this month to merge its radio division with Entercom. Accounting rules require the company to now list radio as a discontinued operation. That means it couldn’t be included with CBS’ Q4 revenues although it is included in net earnings.
A handful of Wall Street analysts adjusted their forecasts. Among them, RBC Capital Markets’ Steven Cahall projected revenues of $3.65 billion, Nomura Instinet’s Anthony DiClemente moved to $3.66 billion, Pivotal Research Group’s Brian Wieser looked for $3.70 billion, and UBS’ Douglas Michelson anticipated $3.88 billion.
CBS shares fell 1.1% in initial post market trading.
“We are already exceeding our projections to generate billions of dollars in incremental revenue, thanks to our new, fast-growing revenue sources and the strength of our base business,” CEO Les Moonves says.
The radio deal, he adds, “will allow us to focus even more on our core content strength and enable our faster-growing revenue to drive our results like never before. Across the board, our strategy of creating the best content, and distributing it in all the ways consumers want it, continues to position CBS to succeed no matter how the world changes.”
The Entertainment unit, dominated by the CBS network, had revenues of $2.39 billion, down 3%. Ad sales fell 8%, due in part to the changes in football. But retransmission consent revenues, plus subscription fees from services including CBS All Access, were up 28%.
While the lost NFL games hurt the top line, the lower costs helped the bottom one: Operating income for the unit increased 7% to $371 million.
At Cable Networks, which include Showtime, operating income fell nearly 4% to $219 million with revenues down 10.9% to $501 million. Last year included deals for House Of Lies.
The Simon & Schuster-led Publishing operation saw operating income increase 6% to $36 million with revenues down 10% to $209 million. The 2015 numbers included sales of Donald Trump’s Crippled America and Stephen King’s The Bazaar Of Bad Dreams.
And CBS’ Local Media operating, which includes its TV stations, benefited from political ads: operating income was up 45% to $216 million with revenues up 16% to $526 million.